New Macs, iPhone expansion predicted to boost Apple revenue

With Apple expected to introduce new Macs at any point and the iPhone switching to a multi-carrier model in multiple countries, analysts believe the company's profits could climb even higher.

In notes to investors issued Friday by both Morgan Stanley and Kaufman Bros., analysts have raised the price target for AAPL stock and expect big things from the Cupertino, Calif., company in the coming months.

Morgan Stanley

With recent announcements that both Vodafone and Orange would soon sell the iPhone in the U.K., along with Apple's non-exclusive agreement with China Mobile, it would appear that the standard of one-carrier iPhone exclusivity is coming to a close. To that end, analyst Kathryn Huberty with Morgan Stanley believes the iPhone is now poised for significant growth in the next year.

In the latest note to investors, Huberty said that the top six iPhone markets, where 70 percent of iPhones are sold, still remain in single-carrier contracts. If Apple were to move away from that model, it could increase its market share to 10 percent on average -- up from the current 4 percent total held by Apple.

"We expect Apple to broaden iPhone carrier distribution over the next two years and believe this opportunity is under-appreciated by the investment community," Huberty said. "This total opportunity is substantial -- it adds up to an incremental 20.3 million iPhone units and $3.76 in adjusted (earnings per share), 100 percent and 41 percent of iPhone units and adjusted EPS respectively over the last 12 months."

The note predicts that Europe, China and Korea will all see near-term multi-carrier expansion, while the U.S. is viewed as a long-term opportunity.

Citing the French market as a case study, the report details how Apple's handset marketshare grew 77 percent after French regulatory authorities ended Orange's iPhone exclusivity in the first quarter of 2008. After the handset went to a multi-carrier model, wireless operators were forced to compete and offer greater discounts on the hardware for consumers.

"This has important implications for demand, particularly on the service plan pricing frunt," Huberty wrote. "We know from our past survey work that service plan pricing is one of the top barriers to iPhone adoption -- 35 percent of respondents in our November 2008 Apple survey said so."

Kaufman Bros.

Analyst Shaw Wu has picked up on persistent rumors and evidence that Apple will release new Macs very soon. Sources have told AppleInsider that the iMac, Mac mini, and MacBook are all due for a refresh. In addition, unusually low inventory on hardware has bolstered the belief that new hardware is imminent.

"This likely means better-than-expected demand and/or a refresh is coming," Wu said. "At this point, we are sticking with our 2.8 million Mac forecast which we believe is already at the higher-end of expectations. We have been picking up strong evidence of new iMacs with quad-core (or very high-powered dual core) and a new subnotebook form factor for some time. Perhaps we may see these in the near future or the next quarter or two."

Wu said sources have also indicated that iPod sales are strong, particularly with the new iPod nano with video camera. The $199 iPod touch is said to also be a strong seller, particularly as a gaming system.

Tack on strong sales of Snow Leopard and Wu sees Apple garnering $9.1 billion in revenue for the just-finished September quarter and $1.41 earnings per share. For the 2010 fiscal year, Kaufman has forecast $41.5 billion in revenue and $6.70 earnings per share, with a 12-month AAPL price target of $214.

Apple is doing great things. I would like to see them grab at the opportunity before them and go for government business. I've seen Macs pop-up around the military, but not on a large scale. They clearly have the education market and are making serious inroads into the home market, but if Macs were ubiquitous in government agencies, they would be a force to be reckoned with.

the US Militay has been on Microsoft's Active Directory for 7-8 years or so. For Apple to make inroads with the US Government they would have to do a lot of work on their Open LDAP server as well as sell much better server hardware. and allow OS X to be virtualized

... Citing the French market as a case study, the report details how Apple's handset marketshare grew 77 percent after French regulatory authorities ended Orange's iPhone exclusivity in the first quarter of 2008. After the handset went to a multi-carrier model, wireless operators were forced to compete and offer greater discounts on the hardware for consumers.

Hopefully, this will put an end to the FUD from opponents of ending carrier exclusivity agreements.

Hopefully, this will put an end to the FUD from opponents of ending carrier exclusivity agreements.

in france all the carriers are GSM. in the USA we still have CDMA carriers and there is no way the government can force apple to make a CDMA phone to break AT&T exclusitivity. Best you can hope for is a T-Mobile iPhone

in france all the carriers are GSM. in the USA we still have CDMA carriers and there is no way the government can force apple to make a CDMA phone to break AT&T exclusitivity. Best you can hope for is a T-Mobile iPhone

Carrier exclusivity is not about the iPhone specifically. But, hopefully, your follow-up comment will put an end to the FUD from proponents of allowing carriers to introduce incompatible technologies.

you can't make any cell phone maker produce an identical handset for CDMA and GSM. the cost structure is different. i've read that for Android, Google only recently added CDMA support into the OS. before that if you wanted to produce an Android CDMA phone you would have to develop a large part of the network software yourself

companies sign these agreements all the time, not just in cell phones. one company will help with development of a product to share the risk. Any attempt by the federal government to interfere will get shot down by the courts

the US Militay has been on Microsoft's Active Directory for 7-8 years or so. For Apple to make inroads with the US Government they would have to do a lot of work on their Open LDAP server as well as sell much better server hardware. and allow OS X to be virtualized

I thought this was already possible on parallels on an os x server. Is it not?

Posted by the door post at the post office the post man posted his last post-millennial post card with a Penny Black postage stamp via the Royal Post.

companies sign these agreements all the time, not just in cell phones. one company will help with development of a product to share the risk. Any attempt by the federal government to interfere will get shot down by the courts

i thought apple says you can't run virtual instances of OS X server only if hypervisor is OS X server itself? most people run VMWare, WIndows 2008 hypervisor or another product in the other category. VMWare is the standard and Microsoft is good enough if you already have Windows 2008 and don't want to spend the boatload of cash on VMWare.

Second, Apple's server lineup is crap when compared to Dell and HP. a maximum of 3 hard drives in a server is a joke. 32GB of RAM per server is a joke. 3TB max storage is a joke. the external storage prices are way higher than what i bought from HP earlier this year. and I don't see any OS X EMC certified drivers for Emulex HBA's. Does Apple even offer 4 hour onsite response time for servers?

and Active Directory rules because it saves companies A LOT of money and time. we use OpenLdap where i work as well and it doesn't scale very well. you can hit Exchange 2007 with SL natively, but there is a long list of products that are very popular that require native Windows authentication which means Active Directory. and then there are issues of mass management of computers that you can do with Windows. if Apple wants the corporate IT market they have to do what Microsoft did 10 years ago. Use their products in production internally and develop around that

has Microsoft's agreement with PC makers to charge less if they only pre-install Windows ever been ruled illegal by a court? the entire anti-trust case was built around Internet Explorer which even Microsoft doesn't seem to care much about these days

was there ever a lawsuit saying it was illegal for HP and Intel to develop the Itanium together?

I must be missing something... what is that chart illustrating historical stock price supposed to be telling us? It shows some sort of projection range of stock price, but what is the source?

I was looking at this chart also and trying to figure out how it relates to this article. There is not much (or any) reference to it. However, from what I can glean from it, it shows the stock price going up to 300 which is nice...

I was looking at this chart also and trying to figure out how it relates to this article. There is not much (or any) reference to it. However, from what I can glean from it, it shows the stock price going up to 300 which is nice...

It shows a range, which is the confusing part. What is that range based upon? Have any analysts actually forecasted a $300 price for AAPL? Not that I've heard. That diamond in the middle of the range, is that the consensus forecast price, or the forecast of the person who made the chart?

Citing the French market as a case study, the report details how Apple's handset marketshare grew 77 percent after French regulatory authorities ended Orange's iPhone exclusivity in the first quarter of 2008. After the handset went to a multi-carrier model, wireless operators were forced to compete and offer greater discounts on the hardware for consumers.

This is simply untrue, false, totally wrong.
In fact, some would argue that just the reverse occurred: a few weeks before SFR (the number 2 carrier in France) could start selling the iPhone, Orange decreased the price of the iPhone. The very day when SFR announced its price for the iPhone, Orange increased the price of its iPhone to exactly match the price announced by SFR.
Basically, speaking of hardware prices, this statement is mostly wrong even today. Unless you consider a price difference of 0.3% a big enough incentive.
However, having multiple carriers has multiplied the number of contracts and now consumers have a much greater choice for their basic plans and monthly fees, some of which are much cheaper than the exclusive Orange contracts from the start.
So I totally agree that going multi-carrier has been beneficial both to consumers and to Apple whose market share has greatly increased, as noted in the article. But this is not because the operators are offering bigger discounts on the hardware.

in france all the carriers are GSM. in the USA we still have CDMA carriers and there is no way the government can force apple to make a CDMA phone to break AT&T exclusitivity. Best you can hope for is a T-Mobile iPhone

yes but even just the choice between ATT and T-Mobile is good because it forces them to get competitive with pricing and there are areas where ATT coverage sucks but T-Mobile is much better

and that non exclusive framework sets the stage for anyone else that decides to have the same tech Apple chooses to go with in future models being able to easily jump on.

plus if the phones are unlocked it's easier for Apple to shove off complaints about upgrade pricing, rate plans, etc. You go into the store and you buy the phone full price and take it wherever you want (perhaps with the return of the original activation at home scheme) or the carriers can buy batches and subsidize to their hearts content, with their own rules etc.